SkyWest Energy Corp.
TSX VENTURE : SKW

SkyWest Energy Corp.

March 16, 2011 13:11 ET

SkyWest Energy Corp Significantly Increases Year End Reserves and Net Asset Value

CALGARY, ALBERTA--(Marketwire - March 16, 2011) - SkyWest Energy Corp ("SkyWest" or the "Company") (TSX VENTURE:SKW) is pleased to provide our 2010 year end reserves. The following results highlight the success of our 2010 capital program and exceptional growth of the Company.

Highlights:

  • Increased proved plus probable reserves to 10.96 MMboe (52 percent oil and NGL's) and proved reserves to 4.81 MMboe (56 percent oil and NGL's).
  • The net present value ("NPV") of SkyWest's year end 2010 total proved plus probable reserves, at 10% discounted value before tax, is $126 million.
  • SkyWest estimated net asset value is $0.62 per basic share using (PVBT10) values on proved plus probable reserves.
  • Maintained a long reserve life index of 15.0 years based on our 2010 exit production rate of 2,000 boe/d.
  • Developed an internally estimated undrilled oil weighted net Cardium horizontal inventory of approximately 130 wells, of which approximately100 net Cardium horizontal locations (77 percent) remain unbooked.
  • Finding, development and acquisition costs, including future development capital, of $16.61 per boe on proved plus probable reserve additions and $26.32 per boe on total proved reserve additions.
  • Excluding changes in future development costsof $96.3 million, finding, development and acquisition costs would be $7.88 per boe and $17.73 per boe, respectively.
  • Finding and development costs, including future development capital, of $26.10 per boe on proved plus probable reserve additionsand $31.42 per boe on total proved reserve additions.
  • Excluding changes in future development costs of $96.3 million, finding and development costs were $6.76 per boe and $13.95 per boe, respectively.

The Company's reserves were independently evaluated by Sproule Associates Ltd. ("Sproule") as at December 31, 2010. The forecasts of product prices used in this evaluation were based on Sproule's December 31, 2010 price forecasts as detailed below:

Summary of Selected Price Forecasts  
(Effective December 31, 2010)  
                         
Forecast Year   WTI Cushing Oklahoma ($US/bbl )   Edmonton Par Price 40°API ($Cdn/bbl )   Alberta AECO-C Spot ($Cdn/MMBtu )   Henry Hub ($US/MMBtu )
2011   88.40     93.08     4.04     4.44  
2012   89.14     93.85     4.66     5.01  
2013   88.77     93.43     4.99     5.32  
2014   88.88     93.54     6.58     6.80  
2015   90.22     94.95     6.69     6.90  
2016   91.57     96.38     6.80     7.00  
                         
WTI Cushing Oklahoma for 40° API, 0.4% Sulphur  

Summary of Company Gross Reserves (Forecast Pricing)(1)

    As at December 31, 2010(2)     As at December 31, 2009(3)(4)  
    Oil
(Mbbls
)   Gas
(MMscf
)   NGL
(Mbbls
)   Total
(Mboe
)   Total
(Mboe
)
Proved Producing   733.1     4,887.6     115.5     1,663.3     -  
Proved Non-Producing   207.9     1,323.7     49.4     477.9     34.4  
Proved Undeveloped   1,332.9     6,622.0     230.9     2,667.5     -  
Total Proved   2,273.9     12,833.3     395.8     4,808.6     34.4  
Probable   2,490.8     18,478.6     583.9     6,154.5     34.5  
Total Proved Plus Probable   4,764.8     31,311.9     979.7     10,963.1     68.9  

Summary of Before Tax Net Present Values (Forecast Pricing) ($M)(5)

      As at December 31, 2010(2 )   As at December 31, 2009 (3)(4 )
      0% 5 % 10 %   10 %
Proved producing     58,110 44,954   37,486     -  
Proved non-producing     18,120 13,562   11,142     777  
Proved Undeveloped     78,042 47,142   30,903     -  
Total proved     154,272 105,659   79,531     777  
Probable     216,064 90,990   46,703     718  
Total proved plus probable     370,335 196,649   126,233     1,495  

Notes:

  1. Gross Company reserves are the Company's total interest share before the deduction of any royalties and without including any royalty interest of the Company.
  2. Based on Sproule's December 31, 2009 escalated price forecast.
  3. Based on Paddock Lindstrom & Associates Ltd. December31, 2009 escalated price forecast.
  4. SkyWest is the resulting entity following the amalgamation of SkyWest and EMM Energy Inc. on June21, 2010. In accordance with GAAP, SkyWest was deemed to be the acquirer of EMM and therefore, the December 31, 2009 reserves information set forth above and elsewhere in this press release reflects SkyWest's reserves as at December 31, 2009.
  5. The net present values of future net revenue do not represent fair market value.
  6. Calculation of finding and development costs is based on estimates of capital spent in the field during the year ended December 31, 2010 and is unaudited and therefore subject to change.

Information Regarding SkyWest

SkyWest Energy Corp. is a Cardium focused public oil and gas exploration and Development Company, located in Calgary, Alberta with operations in Alberta. SkyWest currently trades on the TSX Venture Exchange (TSXV) under the Symbol "SKW".

Statements herein that are not historical facts may be considered forward looking statements including management's assessment of future plans and operations, growth expectations within the Corporation, expected initial production rates from certain new wells, timing of completion of wells and of production additions, expected size of various plays, construction or expansion of facilities and the timing thereof and expected costs and the effects thereof, drilling plans and the effects thereof. These forward-looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Corporation's objectives, goals or future plans are forward-looking statements. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties including, without limitation, oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, SkyWest's actual results may differ materially from those expressed in, or implied by, the forward-looking statements.

Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although SkyWest believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because SkyWest can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the impact of increasing competition; the ability of SkyWest to obtain equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which SkyWest has an interest in to operate the field in a safe, efficient and effective manner; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development or exploration; the timing and costs of pipeline, storage and facility construction and expansion; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which SkyWest operates; and the ability of SkyWest to successfully market its oil and natural gas products.

Readers are cautioned that the foregoing list of factors and assumptions is not exhaustive. Additional information on these and other factors that could affect SkyWest's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and SkyWest does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

BOEs

Disclosure provided herein in respect of barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • SkyWest Energy Corp.
    Lawrence D. Urichuk
    President & CEO
    403-265-0071 ext.201
    or
    SkyWest Energy Corp.
    Joel MacLeod
    Vice President, Finance & CFO
    403-265-0071 ext.203